Magellan eyes Delaware Basin pipeline regardless of open season

By Luke Geiver | September 05, 2017

Magellan Midstream Partners LP, an independent midstream service provider based in Oklahoma, has announced new plans that will impact Delaware Basin oil producers. For roughly $150 million, Magellan will build a 60-mile, 24-inch pipeline from Wink, Texas to Crane, Texas. In Crane, the new pipeline will connect with the company’s Longhorn pipeline. The Longhorn infrastructure is tied into the Houston and Texas City refining complex.

The Wink line will also help connect Delaware Basin producers to export options becoming available at the Port of Corpus Christi. Although the company will conduct an open season call to gain shipper interest levels and contracts, Magellan said the construction of the pipeline will not hinge on results from the open season.

The new Wink pipeline—scheduled for operation by mid-2019—will initially move 250,000 barrels per day with the possibility to expand to 600,000 bpd based on industry demand.

“Magellan is known in the industry for its independent service prodiver business model,” said Michael Mears, CEO. The company is well situated to give Delaware customers access to pipeline and refining options, he added.

In Wink, the company will also expand inbound and outbound gathering options for Delaware producers, the company said.

For the second quarter 2017, Magellan has already reported a 12 percent increase in net income totaling $210.4 million compared to the year-ago quarter. In the Q2 update, Mears said in early August that the company’s demand for fee-based pipeline and terminal services was solid and that based on discussions with potential customers held then, the company was optimistic about future developments.